Best Of The Hold-Rated Dividend Stocks: Top 4 Companies: MTR, VLCCF, NYMT, HRZN

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends and subsequently result in precipitous share price declines.

TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.

These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.

The following pages contain our analysis of 4 stocks with substantial yields, that ultimately, we have rated "Hold."

Mesa Royalty

Dividend Yield: 8.50%

Mesa Royalty (NYSE: MTR) shares currently have a dividend yield of 8.50%.

Mesa Royalty Trust holds net overriding royalty interests in various oil and gas producing properties in the United States. It has interests in properties located in the Hugoton field of Kansas; the San Juan Basin field of New Mexico and Colorado; and the Yellow Creek field of Wyoming. The company has a P/E ratio of 11.98.

The average volume for Mesa Royalty has been 4,000 shares per day over the past 30 days. Mesa Royalty has a market cap of $40.0 million and is part of the financial services industry. Shares are up 9.9% year to date as of the close of trading on Friday.

TheStreet Ratings rates Mesa Royalty as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • MTR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 8.81, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for MESA ROYALTY TRUST is currently very high, coming in at 100.00%. MTR has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, MTR's net profit margin of 94.63% significantly outperformed against the industry.
  • MTR, with its decline in revenue, underperformed when compared the industry average of 5.5%. Since the same quarter one year prior, revenues fell by 25.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • MESA ROYALTY TRUST's earnings per share declined by 25.5% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, MESA ROYALTY TRUST reported lower earnings of $1.93 versus $2.96 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 25.9% when compared to the same quarter one year ago, falling from $0.88 million to $0.65 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Knightsbridge Tankers

Dividend Yield: 8.60%

Knightsbridge Tankers (NASDAQ: VLCCF) shares currently have a dividend yield of 8.60%.

Knightsbridge Tankers Limited, a shipping company, engages in the seaborne transportation of crude oil and dry bulk cargoes worldwide. As of December 31, 2012, it owned and operated one very large crude carrier and four Capesize dry bulk carriers.

The average volume for Knightsbridge Tankers has been 360,400 shares per day over the past 30 days. Knightsbridge Tankers has a market cap of $199.9 million and is part of the transportation industry. Shares are up 55.6% year to date as of the close of trading on Friday.

TheStreet Ratings rates Knightsbridge Tankers as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 101.8% when compared to the same quarter one year prior, rising from -$57.01 million to $1.01 million.
  • The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels.
  • The gross profit margin for KNIGHTSBRIDGE TANKERS LTD is rather high; currently it is at 57.25%. Regardless of VLCCF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VLCCF's net profit margin of 10.13% compares favorably to the industry average.
  • Net operating cash flow has significantly decreased to $3.64 million or 64.98% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, KNIGHTSBRIDGE TANKERS LTD's return on equity significantly trails that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

New York Mortgage

Dividend Yield: 15.70%

New York Mortgage (NASDAQ: NYMT) shares currently have a dividend yield of 15.70%.

New York Mortgage Trust, Inc., a real estate investment trust (REIT), engages in acquiring, investing in, financing, and managing mortgage-related and financial assets in the United States. The company has a P/E ratio of 8.28.

The average volume for New York Mortgage has been 835,500 shares per day over the past 30 days. New York Mortgage has a market cap of $438.0 million and is part of the real estate industry. Shares are up 8.7% year to date as of the close of trading on Friday.

TheStreet Ratings rates New York Mortgage as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • NYMT's very impressive revenue growth greatly exceeded the industry average of 9.4%. Since the same quarter one year prior, revenues leaped by 79.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, NEW YORK MORTGAGE TRUST INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • NEW YORK MORTGAGE TRUST INC's earnings per share declined by 10.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NEW YORK MORTGAGE TRUST INC increased its bottom line by earning $1.25 versus $0.55 in the prior year. For the next year, the market is expecting a contraction of 21.6% in earnings ($0.98 versus $1.25).
  • The gross profit margin for NEW YORK MORTGAGE TRUST INC is currently lower than what is desirable, coming in at 25.88%. Regardless of NYMT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 21.57% trails the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Horizon Technology Finance

Dividend Yield: 9.80%

Horizon Technology Finance (NASDAQ: HRZN) shares currently have a dividend yield of 9.80%.

Horizon Technology Finance Corporation, a specialty finance company, lends to and invests in development-stage companies in the United States. The company has a P/E ratio of 11.52.

The average volume for Horizon Technology Finance has been 42,300 shares per day over the past 30 days. Horizon Technology Finance has a market cap of $134.8 million and is part of the financial services industry. Shares are down 5.8% year to date as of the close of trading on Friday.

TheStreet Ratings rates Horizon Technology Finance as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 8.6%. Since the same quarter one year prior, revenues rose by 31.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for HORIZON TECHNOLOGY FINANCE is rather high; currently it is at 65.15%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.62% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to -$16.25 million or 7.16% when compared to the same quarter last year. Despite an increase in cash flow of 7.16%, HORIZON TECHNOLOGY FINANCE is still growing at a significantly lower rate than the industry average of 269.14%.
  • In its most recent trading session, HRZN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, HORIZON TECHNOLOGY FINANCE underperformed against that of the industry average and is significantly less than that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Other helpful dividend tools from TheStreet:
null

If you liked this article you might like

3 Hold-Rated Dividend Stocks: AI, MTR, IRET

3 Hold-Rated Dividend Stocks: AI, MTR, IRET

Ex-Dividend Alert: 3 Stocks Going Ex-Dividend Tomorrow: MTR, IRT, PSEC

Ex-Dividend Alert: 3 Stocks Going Ex-Dividend Tomorrow: MTR, IRT, PSEC

Worst of the Worst: Stay Away From This Awful Energy Royalty Trust

Worst of the Worst: Stay Away From This Awful Energy Royalty Trust

3 Stocks With Upcoming Ex-Dividend Dates: MTR, CINR, STAG

3 Stocks With Upcoming Ex-Dividend Dates: MTR, CINR, STAG

What To Hold: 3 Hold-Rated Dividend Stocks MTR, HEES, TNH

What To Hold: 3 Hold-Rated Dividend Stocks MTR, HEES, TNH